Maximizing Franchisee Relationships
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Information About the iFranchise Group Emerging Franchise Systems Head office: Chicago Established: 1997 Focus Areas
Franchise strategy Operations Training Franchise relationships Franchise vendor programs
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Established Franchise Systems
Experience Building Relationships
Founded:
1988
Locations:
1,600
Countries:
29
Acquired by Focus Brands in 2010 Growth largely with existing franchise owners Virtually no franchisee-initiated litigation in the company’s history
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Formula for Creating Great Franchisee Relations
Strong Business Model
Franchise Owner Engagement
Solid Franchisee Profile
Providing Quality Support
Franchise Owner Selection
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Strength of the Franchise Business Model
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Strength of the Franchise Business Model
Question: How do you maintain such good relationships with your franchisees?
Answer: We just make sure that they make a bit more money each year‌..
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Strength of the Franchise Business Model
The business model that is franchised should allow a franchisee to: ďƒ˜ Replace their current income within a year or two of opening their franchise ďƒ˜ Achieve revenue and profitability revenues that meet or exceed their expectations prior to joining the franchise program ďƒ˜ Feel that their royalty payments and other fees are more than justified based on the value they receive from membership in the franchise system
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Strength of the Franchise Business Model
Factors influencing the strength of the franchisor’s business model: Ease versus complexity of operation Ramp up of revenues within the first 12-18 months Revenue potential for the franchisee in their market Gross margins on products sold or services offered Uniqueness of the business model compared to competitors
Adaptability of the business model to different regions and urban/rural areas
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Strength of the Franchise Business Model Stronger business models attract better quality franchisees:
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Strength of the Franchise Business Model
Profitability Revenues
Expenses Franchise
Independent Start-up
Losses
Break-Even Point Page 10
Time Time
Establishing the Right Franchise Owner Profile
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Franchise Owner Profile Your owner profile will be guided, in part, by the types of franchises you award: Single Unit Single Store
AreaMulti-Store Development
Area Master Development
Franchisor
Franchisor
Franchisor
Single Unit Agreement
Area Development Agreement
Area Rep.
Store
Store 1
Store 2
Store 3
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Representative
Franchise Agreement
Franchise Agreement
Franchise Agreement
Store
Store
Store
Franchise Owner Profile
Your targeted profile should be weighted toward the factors you feel are most critical to the successful operation of a franchise location:
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Franchise Owner Profile
Why franchisees are most likely to fail: Lack of capital needed to grow and sustain the business Inability to attract, lead and keep good employees Failure to follow the franchisor’s system and best practices Lack of engagement with the franchise community
Lack of prior business experience
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Franchise Owner Profile
Good franchisors continually evaluate the refine their franchisee profile:
Refine Franchisee Profile
Recruit Franchisees
Benchmark Top Performers
Evaluate Franchisee Performance
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Franchise Owner Selection
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Franchise Owner Selection
You can have . . . . The greatest concept in the world, and The strongest business model among your competitors, and The best intentions as a franchisor‌.but
If you award franchises to the wrong people, you will struggle to maintain positive franchisee relationships.
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Franchise Owner Selection
If you are thorough in your franchise sales approach and do all you can to adopt best practices in the award process, you’ll likely make good franchisee selection decisions about 85% of the time.
If you take shortcuts and award franchises to people you’re not sure about, you might make good decisions 50% of the time, or less...
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Franchise Owner Selection
It’s important to use a sales and qualification process that: Begins with a marketing plan that will attract leads consistent with your desired candidate profile Is planned out in advance, and is followed with every candidate Ensures you take the time to carefully evaluate the candidate rather than rush to an award decision Involves multiple people within your company
Emphasizes to the candidate the importance of hard work, their engagement as owners, and their willingness to follow your established systems
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Franchise Owner Selection
Typical Franchise Sales and Qualification Process:
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Franchise Owner Selection
Franchisee candidates most likely to form strong relationships with their franchisor demonstrate the following during the sales process: They are attracted to, and are supportive of, the franchisor’s vision and culture
While money is always important, it’s not the key driver behind their desire to own the franchise The candidate asks detailed questions about the operation and the complexity of running the business The follow and respect the defined qualification process The candidate plans to be personally involved in the franchised business The candidate reaches out to many of the existing franchisees in the system to ask about their experience with the brand and franchisor
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The Importance of Quality Franchisee Support to the Development of Strong Franchisee Relations
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Franchisee Support
A strong franchisee support program will create franchisees that are more: Profitable Inclined to respect the franchisor and its support staff
Likely to be engaged with the franchisor and franchisee community Motivated to follow the franchisor’s systems and uphold standards Committed to reinvesting in their business Likely to want to expand by opening more locations/territories
In short, effective support from the franchisor will foster stronger and more positive franchisee relationships.
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Franchisee Support
In order to provide effective support to your franchisees, you must:
Lead by Example in Your Own Operations
Be Clear in Terms of Your Support Policies/Practices
Hire Capable Support Staff
Hire Support Staff Ahead of Your Actual Need
Maintain a Realistic Ratio of Support Personnel to Franchisees
Be Transparent With Franchisees
Involve Franchisees in the Development of Your Support Programs
Ask Your Franchisees How You’re Doing
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Franchisee Support
Primary types of support franchisors should be providing:
Ongoing Training
Field Business Visits
KPI Analysis
Best Practice Sharing
Local Mkting. Support
System Adv. Fund
Supply Chain Support
Brand Innovation
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Franchisee Support A few things that top performing franchisors do to maximize their franchisee relationships: Continually seek input from their franchisees Credit franchisees with enhancements made to the system Recognize achievement within the franchisee community Return calls and e-mails the same day they are received Reach out to franchisees on a regular basis. Not just when something bad happens Admit mistakes that are made, and then don’t make them over and over Look for opportunities to exceed franchisees’ expectations of support Build an internal culture within the support team that is always supportive of franchise owners
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The Importance of Franchise Owner Engagement
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Franchisee Engagement A high degree of owner engagement brings many benefits:
Promotes increased trust between franchisees and their franchisor Helps the franchisor prioritize investments that need to be made in the system Franchisees will provide many of the best-practices the franchisor’s support program should incorporate Increased acceptance and adoption rates of new initiatives that are introduced
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Franchisee Engagement Effective ways to keep franchisees engaged with the system: Frequent one-on-one communication with the support team Franchisee advisory council Franchise owner conventions Regional training events Web-based Intranet, benchmarking and e-learning platforms
Surveying the opinions of franchisees
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Questions
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www.ifranchisegroup.com 708-957-2300